PTC Accepts Takeover Offer from Schneider Electric

• Our read: EasyAlpha grades PTC Inc a B, pointing to strong profitability among industry peers in the S&P 500 even as growth remains the central watch item.
• The day: Shares closed -1.7% at $144.03 on Friday on light volume, ahead of the weekend acquisition agreement.
• Watching: Scheduled quarterly earnings on Wednesday, November 4, along with regulatory and shareholder reviews of the proposed takeover.

Shares of PTC Inc (PTC) fell 1.7% to close at $144.03 on Friday, with trading volume reaching 0.6x of its 20-session average. The quiet session capped a subdued stretch for the stock, leaving it -3.4% over the past month and 30.4% below its 52-week high of $206.82. Over the weekend, Schneider Electric agreed to acquire the industrial software company for $22.6 billion.

Under the terms of the transaction, Schneider Electric will pay $205 per share to acquire the business. The offer price approaches PTC Inc's 52-week peak of $206.82, representing a substantial premium over Friday's close.

EasyAlpha graded PTC Inc a B heading into the session, reflecting quality that scores better than most technology peers in the S&P 500. Companies graded A or B have stronger fundamentals, and historically they have carried a lower risk of large drawdowns than companies graded D or E. The company shows strong profitability, where the business generates a profit margin of 41.4% and a return on equity of 35.0%. The stock entered the session trading at a trailing price-to-earnings ratio of 14.0 and a forward price-to-earnings multiple of 16.3.

The primary vulnerability in the company's profile has been growth. Quarterly revenue growth came in at -6.8% year over year, a contraction that weighed on market sentiment and left the shares -17.3% so far this year. Wall Street maintained a constructive view before the transaction was announced, with 60.0% of 20 covering analysts rating the stock a buy and setting an average price target of $174.21, which sat 21.0% above Friday's close.